Nelson Gahadza Business Reporter Zimbabwe needs greater private sector participation in infrastructure development to close critical gaps in energy, transport and irrigation that are constraining productivity, investment and job…
**Nelson Gahadza **
Business Reporter
Zimbabwe needs greater private sector participation in infrastructure development to close critical gaps in energy, transport and irrigation that are constraining productivity, investment and job creation, the World Bank has said.
Presenting the latest Zimbabwe Country Growth and Jobs report, Mr Victor Steenbergen, Senior Country Economist for Zimbabwe at the World Bank, said that infrastructure investment should form one of the three pillars of reforms required to unlock Zimbabwe’s long-term growth potential.
He said inadequate infrastructure had emerged from years of macroeconomic instability, unsustainable debt and weak investment, resulting in higher production costs and reduced connectivity.
“The current unsustainable debt situation and the persistence of multilateral arrears have prevented Zimbabwe from accessing concessional finance, and that makes borrowing money very expensive,” Victor said.
Zimbabwe also went for years under illegal sanctions that prevented the country from accessing cheap financing as well as restructure its debt.
“That, in turn, has also resulted in large infrastructure gaps in terms of energy, transport and irrigation. All of these have raised production costs, reduced productivity, limited connectivity and increased vulnerability to climate change.”
According to the report, unreliable electricity is currently the single most binding constraint facing firms and households, with power outages estimated to cost the economy about 6 percent of GDP annually.
Mr Victor said addressing the energy deficit would require a combination of public and private financing, with competitive tendering and potential government guarantees helping to unlock additional private capital.
He said the Government, working with the World Bank and African Development Bank, was already pursuing a national energy compact aimed at mobilising financing for generation, transmission and access.
The report recommends continued implementation of the energy compact, improved planning through the National Energy Fund, and maintenance of cost-reflective tariffs while ensuring affordability for businesses.
Transport infrastructure also remains a major constraint, with roads and declining rail services limiting firms’ and farmers’ access to markets.
Mr Victor said Zimbabwe should ring-fence road maintenance expenditure in the short term, while prioritising key trade corridors when additional financing becomes available.
The report also sees potential to expand irrigation through farmer-led models, reducing the economy’s vulnerability to rainfall-dependent agriculture.
However, Mr Victor stressed that public investment alone would not be sufficient to close the infrastructure deficit.
The report estimates that without major reforms, Zimbabwe’s growth could remain at around 3 to 4 percent, leaving the country unable to achieve upper-middle-income status by 2030.
However, implementation of the proposed reform package could lift growth to between 7 and 8 percent, putting the country on a trajectory towards the 2030 target.
Mr Victor said the reforms could ultimately generate more than 200,000 additional jobs and increase real earnings by more than 30 percent per worker by 2040, while raising GDP by about 27 percent.
